Investor always looks for investment opportunities but never does analysis for missing investment opportunities.
We often hear from people that “XYZ” stock was available at very low price but I missed opportunity of investment, if I could have invested money in that stock I could have make lot of profit.
Many investor misses opportunity of investment and this often goes completely unnoticed. At Berkshire Hathway Investment Guru Warren Buffet freely admits he missed many opportunities.
Warren Buffet likes to spend a little time contemplating why it didn’t cross his radar screen or why he saw it hut didn’t act. He does this with the hope that his reevaluation of the situation will enlighten him enough that he does not repeats the same mistake in the future.
In Warren’s world there are two basic kinds of missed opportunities:
(1) Ones we missed because they weren’t on our horizon
If the opportunity simply wasn’t on our horizon, the solution is to expand our field of search. There is a whole world of business brokers and investment bankers that are more than happy to show us potential opportunities.
(2) Ones we saw but failed to act on
As for the opportunities that we can see hut don’t act on, the most common reason for missing one is that we stumbled in calculating the risk involved. These are opportunities that we would have liked to have acted on, hut mistakenly deemed as too risky.
Mistakes of omission due to miscalculation of risk are the easiest to understand. We took in all the information we had available and made a judgment call based on that information. If we don’t have the right knowledge, we can’t competently make the judgment call.
But mistakes of omission that occur because we didn’t have our eyes open to opportunity or we don’t have enough knowledge and understanding for that opportunity.
The best investor always follow Warren’s example—they examine the opportunities they missed and ask the hard questions as to why they missed them. Then the next time around them just might catch the golden ring instead of watching it slip through their fingers.
At last I would like to share word of wisdom shared by Investment Guru Warren Buffet.
“Since mistakes of omission don’t appear in financial statements, most people don‘t pay attention to them. We rub our noses in mistakes of omission.” – WARREN BUFFETT